Psychographic Segmentation and Related Challenges

Abhijeet Pratap
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What is Psychographic Segmentation?

Segmentation involves dividing the target market into various segments based on identifiable traits. Psychological segmentation involves dividing the target market into segments on the basis of psychological traits such as lifestyles, attitudes, opinions, values and interests. It is different from demographic segmentation in terms of its focus.

Demographic segmentation focuses on the more tangible aspects of consumer characteristics like age, gender, income etc. However, psychographic segmentation has a deeper focus on emotional and psychological aspects of consumer behavior driving buying decisions.

This is also what makes psychographic segmentation more challenging compared to geographic or demographic segmentation. Despite being more challenging to carry out compared to the other segmentation methods, psychographic segmentation offers several major benefits in terms of marketing. Companies can understand the psychological and emotional aspects of consumer behavior to tailor their marketing strategies accordingly and offer a superior customer experience.

In this post, we will discuss the main challenges associated with psychographic segmentation. Since, psychographic segmentation focuses on traits that are not easily observable, it can be more challenging to carry out and therefore psychological data is also more difficult to collect. There are multiple challenges associated with psychological segmentation which we will discuss in this post.

Main Challenges of Psychographic Segmentation:

Subjectivity and Interpretation:-

Psychographic data due to its subjective nature becomes complex to interpret. You cannot easily quantify it the way you can demographic data. Psychographic data can be interpreted in different manners by different people and often people can come to different conclusions with the same psychographic data. You can clearly categorize a person based on his age and gender into a particular group but when you approach the same person on a psychological basis, you may find him exhibiting several different traits such as environmentally aware and outgoing. Psychological traits like opinion or personality cannot be measured and quantified in the same manner as income or age. Therefore, the ambiguity associated with the psychographic data makes interpretations difficult and conclusions inconsistent which leads to complexities in its application to marketing.

Collecting psychographic data can become a challenging task since there are various aspects of their personality and opinions that consumers may not feel open to reveal. While consumers can report biased information, they do not always feel comfortable reporting true information about themselves. After all, you are trying to dig deeper into their personality, nature and emotions and most people are not happy to provide such sensitive information. Sometimes social desirability may also drive them to provide false information.

When you seek to know about people’s personal opinions, they may end up giving you untrue or only partially true information. Sometimes people may feel inclined to report wrong information when filled with the desire to be seen as a part of a particular social group. For example, someone who doesn’t like basketball or going to concerts may still tell you that he likes both. So, gathering true or accurate psychographic data can be a very challenging task which puts a question mark on the reliability of reported data for making safe conclusions.

Limited availability of reliable data:

You are seeking to research people’s personality, opinions, interests etc and such data may be much more difficult to find compared to demographic or geographic data. Where a person lives or which age and income group he belongs to can be found out much more easily compared to hidden information regarding his personality and opinions to understand his deeper motivations and what drives him. To collect such data, you will need to conduct a lot of research and secondary resources to gather such data reliably can prove very costly. If you want to collect demographic or geographic information, government resources will readily provide you with such data. So, apart from being highly complex and time consuming, collecting psychographic data can also be highly expensive for researchers.

Changing consumer attitudes and preferences:

Consumer attitudes and preferences change over time. These changes can be brought about by various factors including technological, cultural, personal or even economic changes. Since consumer preferences keep evolving, psychographic segments may become less relevant over time. Trends change and so do consumer preferences. So, the psychographic data that was collected a few years ago would not prove very useful for the latest marketing strategies. As a result, companies must either conduct their own research or they can pay other research companies to do it for them.

Overlapping segments:

Another important related challenge is the overlap between the various psychographic segments. Some individuals may exhibit different traits belonging to two or more different segments. So, getting distinct and mutually exclusive segments becomes difficult. Overlaps also arise in the case of the other segmentation methods but they are more challenging to deal with in the case of psychographic segmentation.

Proper application of psychographic data to marketing can be complex, requiring advanced analytics and tools to effectively leverage the insights generated from psychographic segmentation. The difficulty related with the interpretation of data also makes it quite challenging to apply the insights. Moreover, small businesses usually lack access to advanced tools and analytics to process the psychographic data.

The insights derived from psychographic segmentation are vastly different from the ones derived through demographic or geographic segmentation which makes it more challenging to relate them with real world marketing situations and apply them to marketing efforts. However, there are advanced analytical tools that can help process, analyze, interpret and apply psychographic data to marketing efforts.

Limited Scale and generalization:

Psychographic segments may not be very suitable for mass marketing efforts since they do not scale well. Companies cannot rely solely on psychographic segmentation for marketing. Generalizing psychographic characteristics to a wider population can be complex and challenging. Companies therefore need to mix segmentation methods to get more relevant and practical insights. For example, they can mix psychographic with demographic data to get better results. In several scenarios, using psychographic segmentation is not advisable and using a mix of segmentation methods can help derive superior results in terms of marketing.

Psychographic segmentation also becomes challenging because of privacy concerns. Collecting personal data from consumers can give rise to such concerns easily. The level of legal regulation with regards to the use and collection of people’s personal data has increased. Companies need to maintain a balance between gaining valuable insights and respecting people’s privacy. In most cases, collecting reliable psychographic data becomes challenging because of the involved privacy concerns. Businesses must collect psychographic data ethically and without hurting user privacy.

Cultural sensitivity:

Cultural differences can significantly affect the outcome of psychographic segmentation. Something that is true for one culture may not hold true for another. Companies need to account for the cultural differences during segmentation since cultural nuances affect psychographic segmentation and its accuracy. By taking the differences into account, companies can ensure that the results are accurate. In several scenarios, these cultural differences have a major meaning and can significantly alter the results of segmentation and targeting.

Limited predictive power:

Psychographic segmentation can provide deep insights into current attitudes and behaviors. However, its predictive power in terms of future actions and behavior is limited. Consumer behavior can be affected by several factors. Over time consumers’ preferences and behaviors can be affected by several unpredictable factors. Due to that, one cannot rely on psychographic segmentation to predict future buying behavior.

Resource intensive:

Conducting in depth psychographic segmentation can be a resource intensive process. Companies that want to carry out research on their own will need to spend on analytical tools and other things. The process itself is time consuming and costly. There are companies like Nielsen or Gartner which can make available such data but these reports are still costly. Small businesses that do not have a huge dedicated budget for marketing may be unable to carry out psychographic segmentation for marketing because of its resource intensiveness.

Conclusion:

In this way, there are several challenges associated with psychographic segmentation. While it is a resource intensive process requiring both time and money, there are other types of challenges including complexity of interpretation and application making psychographic segmentation all the more complex for businesses. Despite the associated challenges and complexities, psychographic segmentation is a necessary evil. It helps acquire the type of deeper insights behind consumer behavior and buying motivations that are not available using other segmentation types. It is why businesses having the budget and resources invest in psychographic segmentation. It can also be mixed with other segmentation types to achieve better results.